Grant Achatz is trying an innovative pricing system at his new restaurant Next. There is a set menu and instead of taking reservations and bringing a check at the end of the meal, Next is selling tickets. The ticket sales save on labor costs of employees taking reservations, distributing checks and running credit cards at the end of the meal. The restaurant sells tickets through its own website so it does not share revenue with opentable. The price of the ticket varies by day and time. This is classic profit-maximizing price-discrimination. At times where demand is high, charge a high price; when demand is low charge a low price and keep the restaurant busy when all the lights are on and chefs are in the kitchen. So far, so good.
All the excitement is coming from the explosion in the resale market for Next tickets. Resale is allowed by the restaurant. They seem to think that it is impossible to stop so why not make it above board and monitor it carefully so there is no sale of fake tickets? Also, if someone manages to get a ticket for a particular time or day and then finds they cannot make it, they have the opportunity to sell the tickets. It seems tickets for two with a face value of $170 are selling for $1000. If Achatz and his partner Kokonas thought they were going to give impecunious Alinea fans a better deal, they were mistaken, at least at the opening of Next. Plus all the revenue generated by resale is being handed over to people who were lucky enough to get into the start of the queue. These might be true Achatz fans now but at the next round they will morph into the kind of ticket scalpers we see at Cubs games. Achatz should redesign the ticket pricing to capture some of the revenue from the resale market. At the very least he can take home more money; at best he can make the restaurant bigger and increase capacity till ticket prices fall to reasonable levels.
There a solution that gets Achatz and Kokonas more revenue: an auction. The Cheap Talk team is clearly the obvious crew to consult on the auction. Roger Myerson won a Nobel Prize for his work on auctions, Jeff has dabbled and so have I. I know I’d be willing to work for a table for two at either Next or Alinea and I bet Jeff would too. Roger, I can’t speak for, but in my experience he is always willing to try new things and experiment. So, how about it? We are just up the road and can pop down anytime.